Category Archives: Insurance

Financial planning for my unborn child

father-to-be-20986067

You must be thinking this is a typical “Kiasu” Singaporean father to start planning even when baby is not borned yet!! I have to admit to my “Kiasunity” because I care!! Ho Ho Ho!!

Do note that I am not a professional financial planner. I am just using what I advocate for my own financial planning for my family and derive what I think is right for my baby.

You must and should look at your existing financial conditions before deciding what to cover for your newborn as every individual has different priorities in life.

Below are my own opinions but I will still like to hear from my financial planner as he is more experienced than me in this area. Only then I could further improve in this area in the future.

Why you should cover your newborn as quickly as possible?

The birth of a new child can be one of the most joyous experiences of your life. However, a number of serious concerns do accompany this happy occasion. One of these concerns is the question of health insurance for your child. Newborn babies face the possibility of developing health issues just like any other person.

Reference from: http://www.ehow.com/about_6685734_health-insurance-newborn-babies.html

What insurance coverage to buy?

These are a comprehensive of all 6 key areas Life, Total Permanent Disability, Critical Illnesses, Child Related Illnesses, Accident & Hospitalization Bills that you can take as reference when deciding what to cover for your newborn.

Lastly, many financial planners will definitely ask you to purchase a so called education endowment plan to set aside fixed savings to prepare your child for future education. To me, this is just a long term (15-20 years) pure fixed savings plan.

For financial savvy people, this is unnecessary as we know endowment plans returns are quite pathetic (most unable to beat inflations) and I am sure we can beat them by creating our own endowment plan which I will write a separate article on creating my own endowment plan for my child’s future education.

Depending whether you are savvy enough to invest on your own to beat the returns of the endowment plan. If not, you can buy as a form of savings for your child future education.

Listed in order of priority:

  1. Upgrade to a Private Shield plan – Designed to cover major/catastrophic events related to Hospitalization & Surgery (H&S). – MUST HAVE!
  2. Personal Accident plan – Designed to cover any unforeseen accidents. There are some accident plans that cover common child related illnesses like “HFMD” – Hand Foot Mouth Disease. – MUST HAVE!
  3. Critical Illnesses – Good to have but not necessary at this stage.
  4. Total Permanent Disability – Good to have but not necessary at this stage.
  5. Whole life plan – Not necessary as I always advocate buying term and invest the rest.
  6. Education Endowment Plan – Not necessary as I will create my own endowment plan.

If you can afford, please cover your child with at least the #1 H&S plan else you will definitely be poorer when the baby needs to get treatments in hospital which are not uncommon for newborns.

For #3 to 5, to me they are required when there is a need for income replacement which means they are working and since babies depends on parents to survive so they are not required. Instead, I think parents should insure themselves sufficiently in order to provide for the child when something unfortunate happens.

When the insurance coverage should starts?

Coverage should start as soon as they are able to be insured and most insurers have got waiting period like 3 weeks to 1 month after birth before they will provide coverage like hospitalization plans etc.

The earlier you cover them also means there are less chances of any exclusion in the plan. Insurance is a risk & probability game.

Who to buy from?

I suggest purchasing from the same insurance agent/financial planners that you have dealing with for many years. There are simply too many insurance plans in the market and each has its own competitive advantage.

For me I like to consolidate all family related insurances plan with the same person that had served me well all the years. This saves me a lot of time even if I need to pay a little bit more and when comes to claims (touch wood), it is also easier speaking to one person.

For those who like to DIY and understand more about insurance, I suggest you read up more online and form your own opinion as I always say “No one cares about you more than yourself”!

I personally like Mr Tan Kin Lian website as it provides a lot of insights about financial planning and insurance in local Singapore context; you may want to visit to educate yourself. http://www.tankinlian.blogspot.com

Wishing all parents or parents to be a very happy 2014 and enjoy the happiness brought to you by the newborn!! To me, money can never buy such happiness!!

As for myself, I and my wife are anxiously looking forward with excitement of becoming a first time parent in 2014!! It is going to be an exciting year for both of us!!!

Portfolio hedge using insurance protection

Many people will think that hedging risk against portfolio means buying put option or any derivatives to protect downside when market goes south. I think to protect capital and portfolio gains, we should be buying insurance instead. Of course not any insurance, I am referring to purely insurance for protection.

Since I am managing the family monies which mean I need to hedge the capital risk of the portfolio against any illness of which my parents may encounter when they grow old.

Choy Choy Choy! But in reality this is happening to people around us, have you heard about XXX parents contracted cancer and did not have any hospitalization coverage?? Plenty of examples around us, we are just praying this isn’t happening to us anytime sooner!!

Instead of praying, I will hedge against any potential calamity which might happen to my parents whether it’s personal accident or major illnesses where they will draw capital from their retirement nest to pay off the hefty medical treatments.

Like many others, my parents in their generation doesn’t really believes in insurance and did not have enough insurance coverage especially hospitalization plans. They used to tell me, got cancer then die lah!! But I always reply what if you don’t die and illness drag for years … they say they will die!! Hahaha, that’s their mentality.

For me, I don’t need them to leave me what big insurance payout after they “move on” but just ensure they have enough to pay their hospitalization bill when their time comes. No need to buy what whole life plan, endowment plan etc

I reviewed their existing insurance when I started managing the family monies 3 years ago and added some protection “hedge” like upgrade their medishield to private shield plans up to govt A ward and also included an accident plan. Old people can get into accident very easily even at home like sprain back etc, this plan covers TCM (Traditional Chinese Medicine) as well.

As you see, there are already exclusion because they have existing illnesses already so private insurer had excluded them totally. These are the risk the portfolio have to take since they can no longer be insured but at least I cover any others that might happen. Insure early, my friends!

The game plan is easy, I used the passive income generated from the portfolio to pay for their insurance premium and in that case they don’t need to touch their savings or my savings.

In short, the portfolio is funding the “hedge” itself if it continues to generate passive income

For those who have aged parents like me, do consider reviewing their existing insurance coverage and take action today to avoid any regrets and “what-if” situation.

Eventually they cannot afford to pay? Who pay? Government pay? Fat hopes!! You will be the one paying for bills!!!

You can either speak to an insurance agent or DIY the insurance plan yourself like what I did. Remember keep it simple (separation between protection & investment). Buy what you need and not what the agent wants to sell you!!

Be happy and healthy always!!

Mum’s Insurance Type Insurer Plan Coverage Exclusion
MediShield CPF CPF C

 As charged

 
Supremehealth CPF+Cash Great Eastern A

 As charged

1) Disorders of the heart
2) Cerbrovascula Accident / Stroke
TotalShield Cash Great Eastern A

 As charged

1) Disorders of the heart
2) Cerbrovascula Accident / Stroke
Accident (Deluxe) Cash AIA  

 $100,000.00

1) Disorders of the heart
2) Cerbrovascula Accident / Stroke
DPS (Till 60) CPF Great Eastern  

 $  50,000.00

 
ElderShield CPF NTUC  

                –  

 
           
Dad’s Insurance   Insurer Plan Coverage Exclusion
MediShield CPF CPF C

 As charged

 
MyShield CPF+Cash Aviva A

 As charged

1) Disorders of the heart
2) Cerbrovascula Accident / Stroke
MyShield Plus Cash Aviva A

 As charged

1) Disorders of the heart
2) Cerbrovascula Accident / Stroke
Accident (Deluxe) Cash AIA  

 $100,000.00

1) Disorders of the heart
2) Cerbrovascula Accident / Stroke
DPS (Till 60) CPF Great Eastern  

 $  50,000.00

 
ElderShield CPF NTUC    $             –